Clandestine removal can be proved by seized records and an unretracted statement unless credible rebuttal is produced.

Seized documentary material and a contemporaneous, un-retracted statement can support a finding of clandestine removal of excisable goods when the surrounding circumstances corroborate the entries. The pocket diary entries were explained by the maker as reflecting manufacture and removal of the firm's goods, were attested by persons connected with the firm, and were later affirmed by a partner's communication. Section 36A of the Central Excises and Salt Act, 1944 gave the seized document a presumption of truth unless rebutted. Because the assessee produced no credible evidence to show the diary was unrelated to the firm or that the removals were duly accounted for, the department was not required to investigate every entry or customer separately.

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Issues: Whether the statement and pocket diary recovered from a person connected with the firm were reliable enough to prove clandestine removal of excisable goods and justify duty demand and penalty.

Analysis: The entries in the pocket diary were explained by the maker as relating to manufacture and removal of the respondent-firm's goods, and the statement was never retracted. The statement was contemporaneously attested by persons connected with the firm, including the power of attorney and a partner, and was further affirmed by a partner's communication acknowledging its contents. The seized document attracted the statutory presumption under Section 36A of the Central Excises and Salt Act, 1944, so the truth of its contents was presumed unless rebutted. The respondents produced no convincing material to show that the diary was unrelated to the firm or that the removals were accounted for in the regular records. The Department was therefore not required to independently investigate every entry or customer once the surrounding circumstances and seized material established the charge.

Conclusion: The clandestine removal was proved and the demand of duty and penalty was sustainable; the appeal succeeded in favour of the Revenue.

Final Conclusion: The order exonerating the respondents was set aside, and the departmental action for duty and penalty was upheld.

Ratio Decidendi: Where seized documentary material is corroborated by a voluntary and un-retracted statement, the statutory presumption as to its truth applies and can sustain a finding of clandestine removal unless the assessee rebuts it with credible evidence.

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